Mike Masnick: 'The sky is rising' for the entertainment industry

More artists make more money than ever, consumers live in an era of abundance, and the overall entertainment ecosystem is thriving.

That's the conclusion of "The Sky is Rising", a report on the state of the entertainment industry.

Since the file sharing service Napster was shut down a decade ago, the entertainment industry has predicted that cultural production would grind to a halt if filesharing on the internet was not curbed. Without a strong and enforced copyright, they argued, there is no incentive to create. An independent report by Mike Masnick, an influential tech blogger and copyright critic, argues the opposite, and has the numbers to back it up.

Advertisement

From 1998 to 2010 the value of the worldwide entertainment industry grew from $449 billion (£285bn) to $745 billion (£474bn), and entertainment consumption per household went up 15 percent from 2000 to 2008. Employment in the entertainment sector grew 20 percent from 1998 to 2008, and the number of independent artists grew by 43 percent. Masnick's figures show that the entertainment industry is growing, and more content is produced and consumed than ever before. Despite the financial crisis there's more money than ever in the cultural industries, and it reaches the pockets of more creators. "There have been so many numbers in the copyright debate,"

Masnick told Wired.co.uk. "Whenever we looked at those numbers and put them into context, everything looked really good. Yet, those numbers weren't making it out into the debate. Certainly, the numbers pushed by the industry are not well-sourced and backed up.

Read next

Gallery: In depth: How Björk's 'Biophilia' album fuses music with iPad apps

ByCharlie Burton

We looked at the overall numbers from as many credible sources as possible, put them into context, and asked: is there a real problem?".

Masnick was recently in Cannes, where he presented his report at the music industry's largest yearly convention, Midem. By combining the industry's own numbers with a variety of public sources it shows impressive growth in film, music, book publishing and videogame industries.

Advertisement

Added to the statistics are case studies; stories of artists like

singer Cee-Lo Green or comedian Louis CK who use the internet intelligently to connect with fans and make more money. "Overall the entertainment industry is growing rapidly and has been doing so consistently over the last 10 to 15 years," says Masnick. "Which is the period we've heard the complaints and fears that the industry is being destroyed. People are spending more money per household on entertainment. If they just wanted stuff for free, we'd see the opposite. The market has exploded with new options, and maybe part of the issue is that the major movie studios and record labels face more competition."

Cary Sherman, head of the Recording Industry Association of America (RIAA), recently criticized internet activists for halting the anti-piracy bills Sopa and Pipa, describing their actions as "undemocratic". In particular, he slammed politicians for succumbing to "a flood of e-mails and phone calls to Congress", shortly after agreeing with the RIAA that "music sales in the United States are less than half of what they were in 1999" and "that direct employment in the industry had fallen by more than half since then".

Read next

In depth: How Björk's 'Biophilia' album fuses music with iPad apps

ByCharlie Burton

Masnick disagrees: "This is misleading at best. It is accurate that direct sales of music have been cut in half. But that's a very narrow picture. Record sales are a relatively small part of the overall industry. Some of it may be due to filesharing online. But it seems more likely that much of it is just due to changes in the marketplace."

Advertisement

He points to new areas of growth in music such as singles, concerts, publishing royalties, and licensing. In fact, the industry as a whole grew throughout the worldwide economic recession. Concert ticket sales tripled between 1999 and 2009. The music industry itself estimates that its total value increased from $132 billion (£84bn) in 2005 to $168 billion (£107bn) in 2010. At the same time, artists receive a significantly bigger slice of the pie when it comes to live and licensing agreements than the traditional 15 percent that artists get from record sales.

Masnick also contends the common claim about job losses. "Pay attention to the small but significant 'direct' employment," he says, explaining that the number only refers to the four major record labels. The industry as a whole is a different story, according to Masnick's report.

The US entertainment sector employed 20 percent more in 2008 than in 1998, a growth rate that is predicted to continue. A whopping 43 percent more people make a living as independent artists in 2008 than in 1998. "From the consumer's perspective, it's fantastic!" Masnick says. "There is a ridiculous amount of new content - music, movies, books, video games - everything. The real problem might be that the small part that previously controlled the industry is shrinking. I don't think this is a problem for anyone other than those who run those companies."

There's Masnick's point: the intermediary has become less important. The report points to new ways that artists can fund projects directly, eliminating the middlemen. The most extreme of these is crowdfunding: where artists raise large or small sums for projects through friends and fans, who, in turn, get different kinds of rewards. Recently videogame developer Tim Schafer beat all records when he raised more than two million dollars (£127m) through the largest of these websites, Kickstarter.

Isn't piracy still a problem though? Masnick says that his mission is not to glorify file sharing, but to contribute nuance to a debate he sees as locked; "The argument that the industry is losing billions of dollars every year is very entrenched. It's standard to preface any argument by pointing that out. I don't think that will go away, even though it's inaccurate. I've tried to be very clear: online infringement is a problem for those who don't adjust. If you do adapt, and recognize what you can do with these things, you could be better off"

Advertisement

For example, Brazilian author Paulo Coelho has sold over 100 million books worldwide. On the Russian market, however, sales were slow. Coelho decided to carry out an experiment: he discretely uploaded a Russian translation of his bestselling novel The Alchemist onto The Pirate Bay, without asking his publishers for permission.

The illegal copy spread, and without further marketing sales of physical copies went from less than 1,000 to over 100,000 in two years. After repeating the experiment on other markets Coelho returned to Harper & Collins and convinced them publish free eBook versions of his novels. Since then, Coelho has used "piracy" to reach more potential readers. "He is focused on reaching out to his fans, and has embraced social media in a tremendous way, using Facebook and Twitter, and posting videos to YouTube constantly", Masnick explains. "Despite his age, he has become an internet native. He doesn't broadcast; he is always talking to people, making connections with as many as possible, and this makes his fans incredibly loyal. When you have that kind of connection there is no business model problem. No matter what you do people will want to support you. He feeds off that."

Masnick says that he hopes people will begin to challenge the entertainment industry's numbers. "Going back through history the press and politicians have used the industry's very questionable and out of context numbers as if they were pure facts. We hope we will get them to raise more questions."